All posts tagged Gamesa

Spain’s Gamesa, one of the world’s largest wind turbine manufacturers, could be the first major victim of China’s insatiable appetite for all things renewable energy.

Gamesa has seen its earnings and market value plummet over the last year, as orders tumbled in traditional markets like Spain. Meanwhile, profit margins have been heavily pressured by emerging low-cost manufacturers–in China. Analysts and market participants are wondering whether the time finally has come for a Chinese company to step forward, launch a takeover bid and get it over with.

The scenario, which might leave China with its first significant foothold in the valuable clean energy market of Europe, sounds surprisingly plausible.

So far this year, Gamesa has lost 56% of its market value and now trades at levels not seen since 2003. Net profit has fallen 71% to September, and the company has only managed to avoid losses due to an aggressive cost reduction plan and layoffs in Spain.

While Gamesa is wandering the wilderness, Chinese manufacturers are willing to open themselves up to Western markets. The Chinese wind power market exploded in 2009 with the rise of several large manufacturers, which pushed Gamesa from its position as number three global manufacturer by market share, all the way to number six.

Since September, when Gamesa’s stock value hit rock bottom, analysts from UBS, Societe Generale and Royal Bank of Scotland have been suggesting a takeover bid could be on the horizon.

Large Chinese manufacturers–such as Dongfang and Shanghai Electric–or even some Asian industrial conglomerates still out of the wind power market, such as South Korea’s Daewoo or Hyundai, and Japan’s Mitsubishi, are cited as possible bidders.